entirely from orders received from one Barrett. Account No. 2 resulted wholly from orders received from one Hunt. Such facts were known to the plaintiffs on and prior to March 25, 1904. The defendant advised the plaintiffs with each order in which account it should be entered. The accounts were treated by the parties as though they were with different individuals, the defendant being called upon to make good a balance against him in either, although in the other there might be a balance in his favor. On March 25, 1904, there was in account No. 1 a balance against him, which, as the plaintiffs knew, neither he nor the customer, Barrett, through whose orders it resulted, was able to pay. Account No. 2 was practically even or without a balance. On that date the defendant received from Hunt an order for the purchase of one thousand bales of cotton. Before the defendant would place the order with the plaintiffs or give them any participation in the account arising from it, and on March 25, 1904, the plaintiffs and the defendant agreed that the account No. 2, in which such account should be placed and kept, should be kept separate and distinct, and should not be mixed up in any way with the balance against the defendant in account No. 1. Thereupon the defendant delivered the transaction or account to the plaintiffs. During the days intervening March 25th and March 29th, upon the requests of the plaintiffs, in part directly to Hunt and in part to the defendant and by him communicated to Hunt, as margin or for the protection of account No. 2, Hunt transferred to the plaintiffs $4,000, which was placed as a credit in account No. 2. On March 29th the 1,000 bales of cotton were sold or closed out, and from the avails of sold or closed out, and from the avails of the sale and the $4,000 there was a credit to

the defendant in account No. 2 of about $6,545. The plaintiffs knew at that time that the credit was created by the deposits made by Hunt and the purchase and sale of the 1,000 bales of cotton for him.

ance against the defendant in account No. 1 and his indebtedness to the plaintiffs was wholly discharged upon the books of the plaintiffs by, in part the application to it of the credit in account No. 2 and in part by moneys, in the sum of about $8,000, paid to the plaintiffs by parties other than the defendant, and the plaintiffs delivered to defendant a general release of his liability to them. The defendant then stated to the plaintiffs that they had not the right to appropriate to the payment of his indebtedness the credit in account No. 2 belonging to Hunt, and expressed to them his belief that Hunt would sue them for the amount of it The plaintiffs replied that they would make the appropriation and take care of any suit begun by Hunt. They had stated to him some days before that they needed the money. The defendant declared to them and they knew that he was unable to pay Hunt. Subsequently, Hunt recovered, in an action brought, a judgment against the plaintiffs for the amount of such credit. The plaintiffs paid the judgment and brought this action to recover the sum so paid. Their cause of action, as alleged, is that they paid the sum to the defendant upon his promise to pay it "in extinguishment of a liability for said amount due from the said firm of Miller & Company to one C. P. Hunt and in consideration of said promise," which promise he had failed to keep; that they through compulsion of a judgment had been forced to pay such amount to Hunt; and that the defendant holds the sum so paid him to their use. The trial court charged the jury that if the defendant, as a part of the transaction of April 27, 1904, agreed, expressly or impliedly, to pay Hunt the sum of the credit in account No. 2, or if the plaintiffs were then ignorant that Hunt was the principal in account No. 2 or had any interest therein, the defendant

was liable.

and declared that the action was for mon[1, 2] The Appellate Division recognized eys had and received. That court reversed the judgment of the trial court and directed On March 30th Hunt directed the plain- judgment in favor of the plaintiffs upon the tiffs to deposit $2,000 to his credit in the ground that the defendant promised, through American Exchange Bank. They replying implication, as a matter of law, to pay Hunt that they had no account with him on their the sum of the credit in account No. 2, books did not comply. On that date they which was appropriated on the books of the took and thereafter held the position that plaintiffs in payment of the indebtedness of they would not allow any withdrawal from the defendant to them. The evidence preaccount No. 2 until the defendant had set-sented an issue of fact. The law defining the tled the balance against him under account nature and the obligations of implied conNo. 1. The defendant insistently claimed tracts is thoroughly established. The courts that such position was unlawful; that the recognize by the language of their opinions distinct agreement was that account No. 2 two classes of implied contracts. The one should be kept separate and distinct; and class consists of those contracts which are that the credit in it was the property of evidenced by the acts of the parties and not Hunt alone, and for it the plaintiffs were by their verbal or written words-true conliable to him. After protracted disputation tracts which rest upon an implied promise and negotiation, through which the parties in fact. The second class consists of conwere firm in their respective positions, a tracts implied by the law where none in fact transaction or settlement was had between exist-quasi or constructive contracts creatthem on April 27, 1904, in which the bal-ed by law and not by the intentions of the

In the cases cited and in other cases will be found many illustrations of the application of the principle under consideration.

parties. A contract cannot be implied in contracts it is the consent of the contracting fact where the facts are inconsistent with parties which produces the obligation; in quasi The law its existence, or against the declaration of contracts there is not any consent. alone, or natural equity produces the obligation the party to be charged, or where there is by rendering obligatory the fact from which it an express contract covering the subject-mat- results. Therefore these facts are called quasi ter involved, or against the intention or un- contracts, because without being contracts, they derstanding of the parties; or where an ex-tual contracts.' 1 Pothier on Obligations, 113." produce obligations in the same manner as acpress promise would be contrary to law. The assent of the person to be charged is necessary, and, unless he has conducted himself in such a manner that his assent may fairly be inferred, he has not contracted. Morse [4] The principle has no application here. v. Kenney, 87 Vt. 445, 89 Atl. 865; Mathie It must have as a basis, in order to be apv. Hancock, 78 Vt. 414, 63 Atl. 143; Hertzog plicable, the facts that the plaintiffs paid to v. Hertzog, 29 Pa. 465; Earle v. Coburn, the defendant and the defendant retained 130 Mass. 596; Central Bridge Corporation the sum of $6,380 or thereabouts in order v. Abbott, 4 Cush. (Mass.) 473. Under the that he should pay it to Hunt. The fact that law and the stated facts it obviously cannot the defendant should have paid Hunt is esbe held as a matter of law that the defend-sential to the basis. The facts did not or ant is liable to the plaintiffs for the sum re- do not exist. Each and every act of the covered by reason of his promise or contract plaintiffs was voluntary and with full and implied in fact that he would pay them. In exact knowledge on their part. There was fact, neither the complaint nor the trial pro- not in the transaction mistake, imposition, ceeded upon that cause of action. extortion, or oppression. The entire transaction was covered and is controlled by the express agreement or understanding of the parties. Hunt had demanded the payment of the sum to himself, and the defendant had directed that the sum be so paid. The plaintiffs knew they owed the sum to Hunt, but they needed and desired to keep the moneys. They on their books of account misapplied them to an account existing between themselves and the defendant in reduction of a balance to the debit of the defendant and the credit of themselves. They knew the defendant was not able or did not intend to pay the sum to Hunt. They did not intend that the defendant should pay the sum to Hunt, and expressly declared their intention to take care of the claim of Hunt. They did not place in the hands of the defendant any money or its equivalent. At the close of the transaction he was no more able, and probably less able, as the plaintiffs knew, to pay Hunt, than he was at its commencement. They delivered to the defendant no money or its equivalent which he through any fact was obligated to pay over to Hunt or the plaintiffs. As I have stated, at the close of the transaction the result stood precisely as it did at the commencement of this action (except that the plaintiffs had taken care of the claim of Hunt as they declared they would) and as the parties intended and agreed that it should stand. In it there was no fact through which natural equity or good conscience should obligate the defendant to pay the plaintiffs the sum recovered. Giving it its fullest form and expansion, it would be expressed thus: The defendant owed the plaintiffs a sum which he was unable to pay. The plaintiffs owed Hunt a sum which he was demanding of them and the defendant was directing them to pay. The plaintiffs paid to the defendant the moneys they owed Hunt upon the conditions that the defendant repay it forthwith to them in part cancella

[3] Nor can the law find in the stated facts a quasi contract, or an implied contract in law, on the part of the defendant that he would pay the plaintiffs. A quasi or constructive contract rests upon the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another. In truth, it is not a contract or promise at all. It is an obligation which the law creates, in the absence of any agreement, when and because the acts of the parties or others have placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it, and which ex æquo et bono belongs to another. Duty, and not a promise or agreement or intention of the person sought to be charged, defines it. It is fictitiously deemed contractual, in order to fit the cause of action to the contractual remedy. Board of Highway Com'rs v. City of Bloomington, 253 Ill. 164, 97 N. E. 280, Ann. Cas. 1913A, 471; Morse v. Kenney, 87 Vt. 445, 89 Atl. 865; Columbus, etc., Ry. Co. v. Gaffney, 65 Ohio St. 104, 61 N. E. 152. In People ex rel. Dusenbury v. Speir, 77 N. Y. 144, 150, we said:

"There is a class of cases where the law prescribes the rights and liabilities of persons who have not in reality entered into any contract at all with one another, but between whom circumstances have arisen which make it just that one should have a right, and the other should be subject to a liability similar to the rights and liabilities in certain cases of express contract. Thus, if one man has obtained money from another, through the medium of oppression, imposition, extortion, or deceit, or by the commission of a trespass, such money may be recovered back, for the law implies a promise from the wrongdoer to restore it to the rightful owner, although it is obvious that this is the very opposite of his intention. Implied or constructive contracts of this nature are similar to the constructive trusts of courts of equity, and in fact are not contracts at all. Addison on Contracts, And a somewhat similar distinction is rec ognized in the civil law, where it is said: 'In

of contract made for his benefit, by a special A party to a contract may waive provisions agreement for portions of the contract work.

tion of his indebtedness to them, and that [5. CONTRACTS 305(1)-WAIVER OF PROVIthey take care of the claim of Hunt. What- SIONS SPECIAL AGREEMENT. ever remedy the plaintiffs may have had against the defendant, it seems clear that it was not the equitable one of an action to recover the sum so paid him, as and for moneys had and received.

The judgment appealed from should be reversed, and the case remitted to the Appellate Division to enable it to pass upon the questions of fact presented by the appeal from the order denying the plaintiffs' motion to set aside the verdict and for a new trial,

with costs to the appellant.

WILLARD BARTLETT, C. J., and CHASE, CUDDEBACK, SEABURY, and POUND, JJ., concur. CARDOZO, J., not sitting. Judgment reversed, etc.

(218 N. Y. 351)

BRADLEY v. McDONALD et al. (Court of Appeals of New York. June 6, 1916.) 1. CONTRACTS 187(1) - SUBCONTRACTORS — PROVISION IN PRINCIPAL CONTRACT FOR BENEFIT OF SUBCONTRACTORS-EFFECT. Where a subcontractor waived the right to file liens by the provisions of his subcontract referring to an assignment of the original contract whereby the assignee agreed to pay moneys due subcontractors, held, the agreement of assignment inured to subcontractor's benefit as fully as if he had been named therein, and he was entitled to recover from the assignee of the origi

ral contract.

[Ed. Note.-For other cases, see Contracts, Cent. Dig. §§ 798, 799, 801-804, 806, 807; Dec. Dig. 187(1).]

[Ed. Note.-For other cases, see Contracts, Cent. Dig. §§ 1398-1400, 1467-1475; Dec. Dig. 305(1).]

6. CONTRACTS 244-MODIFICATION-SUBSEQUENT AGREEMENT-VALIDITY.

A modification of a contract by a subsequent agreement, whereby the subcontractor is to receive special compensation for work included in the original contract, is valid and enforceable. Cent. Dig. § 1128; Dec. Dig. 244.]

[Ed. Note.-For other cases, see Contracts,

7. EVIDENCE 513(1)-EXPERT TESTIMONYACTION FOR BREACH OF CONTRACT.

cavation, expert testimony of plaintiff's engineer In an action by subcontractor for extra extending to show the amount of extra excavation, as shown by so-called excess reports, which was due to slides of earth for removing which defendant had agreed to pay, held admissible.

[Ed. Note.-For other cases, see Evidence, Cent. Dig. §§ 2317, 2318; Dec. Dig. 513(1).]

8. CONTRACTS 290-ACTION FOR BREACHCONDITION PRECEDENT-CERTIFICATE OF ENGINEER IN CHARGE-WAIVER.

Evidence tending to show that, by practical construction of contract between contractor and Subcontractor, the contract provision requiring a final certificate of the chief engineer was waived, and that such certificate was unreasonably withheld in fraud and violation of subcontractor's rights, held sufficient to authorize a covery in the absence of such certificate. [Ed. Note.-For other cases, see Contracts, Cent. Dig. § 1317; Dec. Dig. 290.] — — NE9. EVIDENCE 213(1) ADMISSIONS

GOTIATIONS FOR SETTLEMENT. Voluntary admissions of defendant, not made in the presence of plaintiff or his representative, are admissible against objection that they were made in the course of negotiations for a set

[Ed. Note.-For other cases, see Evidence, Cent. Dig. 88 745, 748-750; Dec. Dig. 213(1).]

2. APPEAL AND ERROR 1094(3)-REVIEW-tlement.
AFFIRMANCE BY INTERMEDIATE COURT
FINDINGS OF FACT-CONCLUSIVENESS.
The findings of fact by a referee on dis-
puted items of extra work in performing a con-
tract, when unanimously affirmed by the Appel-10.
late Division, are conclusively presumed to be
sustained by the evidence.

[Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 4341, 4342, 4344-4348; Dec. Dig. 1094(3).]

3. EVIDENCE 220(7) — ADMISSIONS REC-
ORDS OF MUTUAL ACCOUNTS.
Daily and monthly reports of extra work
rendered by a subcontractor at the direction and
under the supervision of the principal contrac-
tor and retained by him without objection to-
gether with the books wherein all records of such
work were kept are mutual accounts, and in an
action by subcontractor to recover compensation
are admissible against the defendant as evi-
dence of his admissions.

[Ed. Note.-For other cases, see Evidence,
Cent. Dig. § 780; Dec. Dig. 220(7).]
4. INTEREST 39(1)-TIME FROM WHICH IN-
TEREST RUNS - RECOVERY OF CONTRACT
PRICE.

A subcontractor under a contract providing payment in full within 90 days after completion of the contract is entitled to interest upon the amount due from the expiration of such 90 days, where the defendant fails to ascertain the amount due and pay the same.

[Ed. Note.-For other cases, see Interest, Cent. Dig. §§ 83, 89; Dec. Dig. 39(1).]

JUDGMENT 711 - CONCLUSIVENESS —

PERSONS NOT PARTIES-SET-OFF.

In an action by subcontractor against the principal contractor for compensation for work done, evidence of a judgment in favor of a third person and against defendant for $77,924.51, in an action to which plaintiff was not a party, held insufficient to establish a right of set-off against plaintiff for $51.229.53 under an agreement that required plaintiff to do part of the work for which such judgment was rendered.

[Ed. Note.-For other cases, see Judgment, Cent. Dig. § 1232; Dec. Dig. ~711.] Hiscock, J., dissenting in part.

Appeal from Supreme Court, Appellate Division, First Department.

Action by William Bradley against Georgie Annie McDonald, executrix, and another. From a judgment of the Appellate Division (157 App. Div. 572, 142 N. Y. Supp. 702) affirming a judgment of Special Term entered on the report of a referee in favor of plainModified and aftiff, defendants appeal. firmed.

George W. Wickersham, of New York City, for appellants. Thomas F. Conway, of New York City, for respondent.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

HOGAN, J. This action was commenced in I due to him from time to time under the conAugust, 1906, against John B. McDonald and tract made by him with the city, the amounts Rapid Transit Subway Construction Com- to be paid to the construction company as pany, hereinafter designated as "construc- the same fell due. (4) The construction comtion company," to recover a balance alleged pany agreed to pay out of the said moneys to be due plaintiff for work performed and so received, so far as the same would be materials furnished for the construction of sufficient for that purpose, all amounts due subsection 6 of the New York subway, also and payable to subcontractors and others by for extra work performed and materials sup- the contractor (Mr. McDonald) for work done plied and for additional work performed and or materials furnished in carrying out the materials supplied in connection with said work required by the contract with the city work. of New York when and as the same became

March 17, 1911, during the progress of the due. trial and before the defendant's case opened, John B. McDonald died. April 8, 1911, Georgie Annie McDonald, executrix of the last will and testament of John B. McDonald, was substituted as a party defendant without prejudice to the proceedings theretofore had in the action.

On or about February 21, 1909, the city of New York by the board of rapid transit railroad commissioners, herein referred to as the "board of commissioners," entered into a contract with John B. McDonald, wherein Mr. McDonald undertook to fully construct and equip the rapid transit railroad commonly known as the "Subway" from the city hall in the borough of Manhattan to the terminals in the borough of the Bronx, and to operate the same as therein provided. Simultaneously with the execution of the contract, Mr. McDonald was required to give security for the performance of the contract on his part, both under the agreement for construction and equipment and also as a continuing security.

July 31, 1900, Mr. McDonald entered into a contract with the plaintiff, by the terms of which plaintiff for a valuable consideration undertook and agreed to construct the rapid transit railroad between the center of Sixtieth street and the center of One Hundred and Fourth street, known as subdivisions A and B of subsection 6. Plaintiff, on the same day, entered upon the performance of the contract having first given the necessary bond required of him.

The contract, amongst other things, referred to the assignment of the original contract to the construction company and to the provisions thereof, whereby the latter company had agreed to pay out of moneys received by it all amounts which might become due and payable from the contractor to subcontractors and a waiver on the part of the subcontractor (plaintiff herein) of the right at any time to file a lien against any moneys which might at any time be or become due from the city under the principal contract, and to have recourse to such moneys in the hands of the construction company for payment of sums to become due and payable under his contract, a copy of which was to be deposited with the construction company.

The fact was conceded in the pleadings and found by the referee that long prior to the commencement of the action the construction company had received from the city, under its agreement with Mr. McDonald, a large sum of money payable to Mr. McDonald under his contract and retained of the moneys so received more than sufficient to meet and discharge any claim established against it or its codefendant, Mr. McDonald, on account of work performed and materials furnished by plaintiff.

The Rapid Transit Subway Construction Company was organized February 16, 1900, to construct or aid in the construction of rapid transit railroads in the city of New York. About the date of the execution of the contract between the city and Mr. McDonald, a written contract was made between Mr. McDonald and the construction company, wherein the construction company agreed to advance to Mr. McDonald the amount of cash security required to be deposited by him with the city comptroller, and to execute as surety or to procure satisfactory sureties to execute the bonds required to be furnished by Mr. McDonald. As security for the repayment of the sum of money to be advanced, and for the protection of the construction company from any liability upon the bonds, the contract provided: (1) That the construction company should receive all moneys payable to the contractor (Mr. McDonald) under his contract, and should disburse the same. (2) That McDonald should not make subcontracts for any portion of the work or for the purchase of any material required in carry-pany any amount due to him. Lawrence v. ing out the work until after the same had Fox, 20 N. Y. 268; Coster v. Mayor, etc., of been first approved by the construction com- Albany, 43 N. Y. 399; Pond v. New Rochelle pany. (3) For the purpose of more effectual- W. Co., 183 N. Y. 330, 76 N. E. 211, 1 L. R. ly carrying out the provisions of the contract, A. (N. S.) 958, 5 Ann. Cas. 504; Rochester Mr. McDonald assigned to the construction Telephone Co. v. Ross, 195 N. Y. 429, 88 N.

[1] The provision of the contract to which attention has been called, read in connection with the agreement between Mr. McDonald and the construction company, entitled the plaintiff to the benefit of the provision of the latter agreement as fully as though he had been specifically named therein, and he is entitled to recover from the construction com

A further provision was "Payment for Ad- tional work performed and materials furditional Work":